COLUMBUS, Ohio, Feb. 1, 2018 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for its fourth quarter and year ended December 31, 2017.

M/I Homes, Inc. Logo (PRNewsfoto/M/I Homes, Inc.)

2017 Fourth-Quarter Results:

  • New contracts increased 22% to a record 1,220 contracts
  • Revenue increased 19% to a record $621.7 million
  • Homes delivered increased 12% to 1,584 - the highest in ten years
  • Pre-tax income increased to $34.1 million from $33.7 million in 2016; including $7.7 million and $4.0 million of impairment charges, respectively; excluding impairment charges, pre-tax income improved 11% to $41.8 million
  • Net income of $15.9 million ($0.53 per diluted share), including a deferred tax asset re-measurement charge of $6.5 million ($0.21 per diluted share) as a result of the Tax Cuts and Jobs Act; 2016 net income was $20.6 million ($0.67 per diluted share)
  • Diluted earnings per share increased 20% to $0.90 per share excluding the impact of the deferred tax asset re-measurement and the impact of the impairment charges in each year
  • Backlog sales value increased 15% to $791 million, and  backlog units increased 12%

2017 Full-Year Results:

  • Record revenue of $1.96 billion, an increase of 16%
  • Record homes delivered of 5,089, a 14% increase
  • Record new contracts of 5,299, an increase of  11%
  • Pre-tax income of $120.3 million, a 31% increase compared to $91.8 million in 2016
  • Pre-tax income in 2017 increased 19% to $136.5 million from $115.2 million in 2016, excluding stucco-related repair and impairment charges in each year
  • Net income of  $72.1 million ($2.26 per diluted share) compared to $56.6 million ($1.84 per diluted share) in 2016
  • Diluted earnings per share were $2.88 compared to $2.32 per share in 2016 - a 24% increase, excluding the impact of the deferred tax asset re-measurement and a $2.3 million equity adjustment related to the 2017 redemption of preferred shares in the third quarter of 2017, along with stucco-related repair and impairment charges in each year

For the fourth quarter of 2017, the Company reported net income of $15.9 million, or $0.53 per diluted share. This compares to net income of $20.6 million, or $0.67 per diluted share, in 2016. For the year ended December 31, 2017, the Company reported net income of $72.1 million, or $2.26 per diluted share, compared to net income of $56.6 million or $1.84 per diluted share in 2016.  2017's net income includes the impact of a deferred tax asset re-measurement ($6.5 million), after-tax stucco-related repair costs ($5.4 million) and after-tax impairment charges ($4.9 million). Exclusive of these charges and after-tax stucco-related repair and impairment charges in 2016, net income increased 25% to $89.0 million compared to $71.1 million in 2016.

New contracts for 2017's fourth quarter reached a fourth quarter record-high of 1,220, increasing 22% from 2016's fourth quarter of 999.  For 2017, new contracts also reached a record-high of 5,299, an 11% increase over 2016's new contracts of 4,755.  M/I Homes had 188 active communities at December 31, 2017 compared to 178 a year ago. The Company's cancellation rate was 13% in 2017's fourth quarter. Homes delivered of 1,584 in 2017's fourth quarter were 12% higher than 2016's 1,416 homes delivered.  Homes delivered for the twelve months ended December 31, 2017 increased 14% to a record-high 5,089 from 2016's deliveries of 4,482. Homes in backlog increased 12% at December 31, 2017 to 2,014 units, with a sales value of $791 million (a 15% increase over last year), and the average sales price in backlog increased 3% to a record-high of $393,000.  At December 31, 2016, the sales value of the 1,804 homes in backlog was $685 million, with an average sales price of $380,000.

Robert H. Schottenstein, Chief Executive Officer and President, commented, "We had strong 2017 results highlighted by all-time Company records for revenue, new contracts, and homes delivered.   These records led us to a 25% increase in our 2017 net income, excluding the non-operating items.  For the first time in our history, we exceeded 5,000 units in both homes delivered and new contracts while reaching nearly $2 billion in revenue.  Importantly, our revenue and earnings growth resulted from strong performances in many of our homebuilding divisions, combined with another record performance by our financial services business.  We also reached our highest year-end backlog level in more than 10 years, with a sales value of $791 million - a 15% increase over 2016."

Mr. Schottenstein continued, "We are excited about our business as we move into 2018.  We ended the year with $152 million of cash, no outstanding borrowings under our $475 million unsecured credit facility, shareholders' equity of $747 million and homebuilding debt to capital ratio of 46%.  We are well positioned for continued growth in 2018 with our strong year-end backlog and a significant number of planned new community openings."

The Company will broadcast live its earnings conference call today at 4:00 p.m. Eastern Time.  To listen to the call live, log on to the M/I Homes' website at mihomes.com, click on the "Investors" section of the site, and select "Listen to the Conference Call."  A replay of the call will continue to be available on our website through February 2019.

M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having sold over 105,600 homes.  The Company's homes are marketed and sold primarily under the trade names M/I Homes and Showcase Collection (exclusively by M/I Homes), and also currently uses the name Hans Hagen Homes in its Minneapolis/St. Paul, Minnesota market.  The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Minneapolis/St. Paul, Minnesota; Tampa, Sarasota and Orlando, Florida; Austin, Dallas/Fort Worth, Houston and San Antonio, Texas; Charlotte and Raleigh, North Carolina; and the Virginia and Maryland suburbs of Washington, D.C.

Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as "expects," "anticipates," "targets," "envisions", "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements.  These statements involve a number of risks and uncertainties.  Any forward-looking statements that we make herein and in any future reports and statements are not guarantees of future performance, and actual results may differ materially from those in such forward-looking statements as a result of various factors, including, without limitation, factors relating to the economic environment, interest rates, availability of resources, competition, market concentration, land development activities, construction defect, product liability and warranty claims and various governmental rules and regulations, as more fully discussed in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2016, as the same may be updated from time to time in our subsequent filings with the Securities and Exchange Commission.  All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed herein will increase with the passage of time.  We undertake no duty to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.  However, any further disclosures made on related subjects in our subsequent filings, releases or presentations should be consulted.   However, any further disclosures made on related subjects in our subsequent filings, releases or presentations should be consulted.

 

M/I Homes, Inc. and Subsidiaries

Summary Statement of Income (Unaudited)

(Dollars and shares in thousands, except per share amounts)






Three Months Ended


Twelve Months Ended


December 31,


December 31,


2017


2016


2017


2016

New contracts

1,220



999



5,299



4,755


Average community count

184



176



183



176


Cancellation rate

13

%


18

%


14

%


14

%

Backlog units





2,014



1,804


Backlog sales value





$

791,253



$

685,457


Homes delivered

1,584



1,416



5,089



4,482


Average home closing price

$

372



$

356



$

369



$

359










Homebuilding revenue:








   Housing revenue

$

588,679



$

504,795



$

1,878,572



$

1,610,496


   Land revenue

21,268



7,004



33,706



38,820


Total homebuilding revenue

$

609,947



$

511,799



$

1,912,278



$

1,649,316










   Financial services revenue

11,755



11,447



49,693



42,011










Total revenue

$

621,702



$

523,246



$

1,961,971



$

1,691,327










Cost of sales - operations

498,470



414,668



1,552,522



1,338,774


Cost of sales - impairment

7,681



3,992



7,681



3,992


Cost of sales - stucco related charges

—



—



8,500



19,409


Gross margin

115,551



104,586



393,268



329,152


General and administrative expense

37,073



33,351



126,282



111,600


Selling expense

39,661



33,347



128,327



108,809


Operating income

38,817



37,888



138,659



108,743


Equity in income from joint venture arrangements

(341)



(227)



(539)



(640)


Interest expense

5,027



4,438



18,874



17,598


Income before income taxes

34,131



33,677



120,324



91,785


Provision for income taxes

18,249



13,115



48,243



35,176


Net income

$

15,882



$

20,562



$

72,081



$

56,609


Excess of fair value over book value of preferred

shares subject to redemption

—



—



2,257



—


Preferred dividends

—



1,219



3,656



4,875


Net income to common shareholders

$

15,882



$

19,343



$

66,168



$

51,734










Earnings per share:








Basic

$

0.57



$

0.78



$

2.57



$

2.10


Diluted

$

0.53



$

0.67



$

2.26



$

1.84










Weighted average shares outstanding:








Basic

27,736



24,671



25,769



24,666


Diluted

31,172



30,166



30,688



30,116



 

 

M/I Homes, Inc. and Subsidiaries

Summary Balance Sheet and Other Information (unaudited)

(Dollars in thousands, except per share amounts)




As of


December 31,


2017


2016

Assets:




Total cash, cash equivalents and restricted cash

$

151,703



$

34,441


Mortgage loans held for sale

171,580



154,020


Inventory:




Lots, land and land development

687,260



602,528


Land held for sale

6,491



12,155


Homes under construction

579,051



494,664


Other inventory

141,772



106,587


Total Inventory

$

1,414,574



$

1,215,934






Property and equipment - net

26,816



22,299


Investments in joint venture arrangements

20,525



28,016


Deferred income taxes, net of valuation allowance

18,438



30,875


Other assets

61,135



62,926


Total Assets

$

1,864,771



$

1,548,511






Liabilities:




Debt - Homebuilding Operations:




Senior notes due 2021 - net

$

296,780



$

295,677


Senior notes due 2025 - net

246,051



—


Convertible senior subordinated notes due 2017 - net

—



57,093


Convertible senior subordinated notes due 2018 - net

86,132



85,423


Notes payable - homebuilding

—



40,300


Notes payable - other

10,576



6,415


Total Debt - Homebuilding Operations

$

639,539



$

484,908






Notes payable bank - financial services operations

168,195



152,895


Total Debt

$

807,734



$

637,803






Accounts payable

117,233



103,212


Other liabilities

192,506



153,322


Total Liabilities

$

1,117,473



$

894,337






Shareholders' Equity

747,298



654,174


Total Liabilities and Shareholders' Equity

$

1,864,771



$

1,548,511






Book value per common share

$

26.83



$

24.48


Homebuilding debt / capital ratio(1)

46

%


43

%



(1)

The ratio of homebuilding debt to capital is calculated as the carrying value of our homebuilding debt outstanding divided by the sum of the carrying value of our homebuilding debt outstanding plus shareholders' equity.

 

 

M/I Homes, Inc. and Subsidiaries

Selected Supplemental Financial and Operating Data

(Dollars in thousands)






Three Months Ended


Twelve Months Ended


December 31,


December 31,


2017


2016


2017


2016

















Adjusted EBITDA(1)

$

58,532



$

51,995



$

184,574



$

148,397










Cash provided (used in) by operating activities

$

13,495



$

7,695



$

(52,530)



$

34,197


Cash used in investing activities

$

(4,746)



$

(9,966)



$

(9,811)



$

(31,645)


Cash provided by financing activities

$

39,318



$

13,404



$

179,603



$

18,788










Land/lot purchases

$

78,085



$

80,648



$

328,226



$

227,646


Land development spending

$

63,683



$

58,441



$

200,702



$

180,204


Land sale revenue

$

21,268



$

7,004



$

33,706



$

38,820


Land sale gross profit

$

1,966



$

1,039



$

2,849



$

4,134










Financial services pre-tax income

$

4,543



$

5,014



$

24,531



$

21,150


















(1)     See "Non-GAAP Financial Results" table below.




















M/I Homes, Inc. and Subsidiaries

Non-GAAP Financial Results (2)

(Dollars in thousands)






Three Months Ended


Twelve Months Ended


December 31,


December 31,


2017


2016


2017


2016

Net income

$

15,882



$

20,562



$

72,081



$

56,609


Add:








Provision for income taxes

18,249



13,115



48,243



35,176


Interest expense, net of interest income

4,305



3,755



16,024



15,286


Interest amortized to cost of sales

6,730



5,275



20,327



18,413


Depreciation and amortization

3,675



3,464



14,174



13,606


Non-cash charges

9,691



5,824



13,725



9,307


Adjusted EBITDA

$

58,532



$

51,995



$

184,574



$

148,397


 

 

M/I Homes, Inc. and Subsidiaries

Non-GAAP Reconciliation (2)

(Dollars and shares in thousands, except per share amounts)






Three Months Ended


Twelve months ended


December 31,


December 31,


2017


2016


2017


2016

Income before income taxes

$

34,131



$

33,677



$

120,324



$

91,785


Add: Impairment

7,681



3,992



7,681



3,992


Add: Stucco-related charges

—



—



8,500



19,409


Adjusted income before income taxes

$

41,812



$

37,669



$

136,505



$

115,186










Net income

$

15,882



$

20,562



$

72,081



$

56,609


Add: Impairment - net of tax

4,916



2,475



4,916



2,475


Add: Stucco-related charges - net of tax

—



—



5,440



12,034


Add: Deferred tax re-measurement due to tax reform

6,520



—



6,520



—


Adjusted net income

$

27,318



$

23,037



$

88,957



$

71,118










Impairment - net of tax

$

4,916



$

2,475



$

4,916



$

2,475


Stucco-related charges - net of tax

—



—



5,440



12,034


Deferred tax asset re-measurement due to tax reform

6,520



—



6,520



—


Excess of fair value over book value of preferred shares redeemed

$

—



$

—



$

2,257



$

—










Divided by: Diluted weighted average shares outstanding

31,172



30,166



30,688



30,116










Diluted earnings per share related to impairment charges

$

0.16



$

0.08



$

0.16



$

0.08


Diluted earnings per share related to stucco-related charges

—



—



0.18



0.40


Diluted earnings per share related to deferred tax re-measurement due to tax reform

0.21



—



0.21



—


Diluted earnings per share related to preferred shares redeemed

—



—



0.07



—










Add: Diluted earnings per share

0.53



0.67



2.26



1.84


Adjusted diluted earnings per share

$

0.90



$

0.75



$

2.88



$

2.32




(2)

We believe these non-GAAP financial measures are relevant and useful to investors in understanding our operations, and may be helpful in comparing us with other companies in the homebuilding industry to the extent they provide similar information. These non-GAAP financial measures should be used to supplement our GAAP results in order to provide a greater understanding of the factors and trends affecting our operations.

 

 

M/I Homes, Inc. and Subsidiaries

Selected Supplemental Financial and Operating Data


NEW CONTRACTS


Three Months Ended


Twelve Months Ended


December 31,


December 31,






%






%

Region

2017


2016


Change


2017


2016


Change

Midwest

433



366



18

%


1,978



1,775



11

%

Southern

544



378



44

%


2,342



1,822



29

%

Mid-Atlantic

243



255



(5)

%


979



1,158



(15)

%

Total

1,220



999



22

%


5,299



4,755



11

%

 

HOMES DELIVERED


Three Months Ended


Twelve Months Ended


December 31,


December 31,






%






%

Region

2017


2016


Change


2017


2016


Change

Midwest

630



527



20

%


1,907



1,690



13

%

Southern

649



550



18

%


2,108



1,708



23

%

Mid-Atlantic

305



339



(10)

%


1,074



1,084



(1)

%

Total

1,584



1,416



12

%


5,089



4,482



14

%

 

BACKLOG


December 31, 2017


December 31, 2016




Dollars


Average




Dollars


Average

Region

Units


(millions)


Sales Price


Units


(millions)


Sales Price

Midwest

828



$

344



$

415,000



757



$

305



$

403,000


Southern

908



$

332



$

365,000



674



$

239



$

355,000


Mid-Atlantic

278



$

116



$

416,000



373



$

142



$

380,000


Total

2,014



$

791



$

393,000



1,804



$

685



$

380,000


 

LAND POSITION SUMMARY


December 31, 2017



December 31, 2016


Lots

Lots Under




Lots

Lots Under


Region

Owned

Contract

Total



Owned

Contract

Total

Midwest

4,456


6,220


10,676




3,747


5,527


9,274


Southern

5,470


7,668


13,138




4,421


5,474


9,895


Mid-Atlantic

1,696


3,021


4,717




2,187


1,708


3,895


Total

11,622


16,909


28,531




10,355


12,709


23,064


 

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SOURCE M/I Homes, Inc.